Speech by Dr. Hon Eric Li Ka-cheung, GBS, JP
PROFESSIONAL ACCOUNTANTS (AMENDMENT) BILL 2004
In the Legislative Council on 9 July 2004
DR. ERIC LI KA-CHEUNG: Madam President, I would like to begin by thanking all Members of the Legislative Council for their assistance, goodwill and time devoted to the amazingly smooth passage of the Professional Accountants (Amendment) Bill 2004 (the ¡§Bill¡¨).
As clearly explained by the Chairman of the Bills Committee, the Hon. Sin Chung-kai, the Bill seeks to amend a number of provisions in the Professional Accountants Ordinance (the ¡§PAO¡¨) and the Professional Accountants By-laws (the ¡§By-laws¡¨) to: -
(a) Improve the existing regime on the regulation of accountants;
(b) Broaden the scope of powers and sanctions available to the Hong Kong Society of Accountants (¡§HKSA¡¨) and to provide certain technical amendments to the PAO and the By-laws in the light of actual operational requirements;
(c) Set out an immunity provision covering the acts of persons performing statutory functions under the PAO in good faith; and
(d) Change the title of the ¡¥Hong Kong Society of Accountants¡¦ to the ¡¥Hong Kong Institute of Certified Public Accountants¡¦ and the designation of its members from ¡§Professional Accountants¡¨ to ¡§Certified Public Accountants¡¨ (¡§CPA¡¨).
This Bill will be a significant step, voluntarily taken by the accountancy profession; to lay down a solid groundwork for HKSA¡¦s regulatory reform proposals in meeting heightened public expectations. It will further enhance the already well-established oversight regime on the conduct and works of professional accountants in order to better safeguard public interests. The proposed changes to the name of HKSA and its members¡¦ designations will update and align the collective corporate brand of Hong Kong¡¦s accountants with other well-recognized international designations. Other miscellaneous amendments to the PAO and the By-laws will also improve the efficiency and effectiveness of HKSA¡¦s operational and regulatory processes.
I would be failing my duty, Madam President, if I am to let this momentous occasion of the accountants pass, without expressing my sincere gratitude to the Honourable Sin Chung-kai, Chairman of the Bills Committee, and members of the Bills Committee for their hard work, their meticulous scrutiny of the Bill, as well as their helpful comments offered to me on how the Bill could be refined. The efforts and time that they have devoted to the deliberations at the four Bills Committee meetings are well spent and are also much appreciated. It would also be remiss of me, if I do not thank warmly the many helpful officials of the Financial Services and the Treasury Bureau and the Justice Department, so ably led by the Hon Fred Ma, (they are Mr. Tony Miller, Mrs. Clarie Lo, Ms. Susie Ho, Ms. Shirley Lam and Ms. Annie Kong) in assisting and guiding us through every step of this challenging mission in true partnership spirit.
I will be moving a number of Committee Stage Amendments (¡§CSAs¡¨) and the Bills Committee has already considered all of them. I would like to take the opportunity to give a brief account of the major amendments and address some of the more important issues over which the Bills Committee has deliberated.
The proposed new section 18B empowers the HKSA Council to give directions either generally to CPAs or to any one or more CPAs in connection with the discharge of any of its functions or duties or the exercise of any of its powers. Penalties may be imposed by Council against a CPA for any failure to comply with its direction.
The Bills Committee has expressed concern that the power conferred on the Council to require a CPA to give an explanation under section 18B(1)(c)(i) might be too broad, as the power is not qualified by any specific grounds or circumstances. To address such concern, HKSA has agreed and I will propose an amendment to section 18B(1)(c) to clearly define the application of this power. The proposed amendment has now narrowed the scope within which the Council may direct a CPA to give explanation in respect of any conduct which appears to the Council to be unbecoming of a CPA, or which may affect the reputation, integrity and status of HKSA, or which may fall within the disciplinary provisions in section 34(1)(a)(iii) to (xii) of the PAO.
The Bills Committee has accepted an amendment to section 22(3) of the PAO pursuant to the proposal of the Privacy Commissioner for Personal Data. Section 22(3) is now amended to follow similar provisions in section 136 of the Securities and Futures Ordinance that specifies the purpose in making the register of certified public accountants available for public inspection. A proposed new subsection (1C) has also been added to section 22 to provide that the register may be maintained in a form other than documentary form to cater for the use of new technology for recording information on the register and for providing on-line access to the register by the public in future.
The Bills Committee has devoted considerable time and efforts in considering the legislative amendments to enhance lay members¡¦ role on the HKSA¡¦s Council, the Investigation Committee and the Disciplinary Committee. The Bills Committee has studied the lay member representation in similar structures of the medical profession, the legal profession and the accountancy bodies of the United Kingdom and Australia. I am now pleased that the Bills Committee supports the initiative of HKSA to open up its governance structure after noting that the main purpose of introducing a majority of lay members into the Investigation Committee and the Disciplinary Committee is to provide further assurance to the public on the transparency and objectivity in these due processes.
In order to address the concerns of the Bills Committee on the choice of lay members, the HKSA shall be pleased to discuss with the Administration on the suitability of the continued appointment of existing lay members in the Disciplinary Panel A. We understand that the Administration will also appoint lay members from the academia, the business sector, the relevant regulatory bodies, and professionals of relevant sectors having regard to the respective functions of the Council and the Panels.
With regard to the proposal in the Bill to make public the hearings of the Disciplinary Committee except in exceptional circumstances, the Bills Committee has raised concerns that public hearings may subject the CPA concerned to premature publicity and this may tarnish the reputation of an innocent CPA. HKSA considers that the proposal is consistent with the community¡¦s expectation for greater transparency in HKSA¡¦s administration of quasi-judicial functions in respect of its members. The risk of premature publicity adversely affecting innocent members is no greater than the risk inherent in the publicity surrounding open court hearings. HKSA considers that CPAs should not be treated differently from other members of the general public, and therefore respectfully maintains that the hearings of the Disciplinary Committee should be held in public as a norm. However, we took note of, and concurred with, the Bills Committee¡¦s views that the proposal should not be presumed as setting an example for other professions, as the holding of disciplinary hearings in public or camera for other professions may be subject to other considerations that are not relevant to the accountancy profession.
The Bills Committee has also raised concern as to whether the exercise of the power to cancel or suspend the practising certificate of a CPA under the proposed section 30(8) and 30(9) will be subject to due process and sufficient safeguards for the CPA concerned. I would like to point out that the relevant requirements for the issuance of a practising certificate are already specified in the PAO. CPAs are well aware of these requirements. Moreover, the CPA concerned would be given the opportunity under section 30(9) to make representations before the Council suspends or cancels his practising certificate.
Madam President, the Bill when enacted will provide the statutory body of the accountancy profession in Hong Kong with a clear and recognizable brand name that reflects the integrity, ethics, skills and knowledge that are expected of today¡¦s accountants. It will also put in place a transparent regulatory framework of the local accountancy profession and equip HKSA with the independence, objectivity and accountability required for regulating its members. I urge Members to support the Bill and the amendments that I will propose at the Committee stage.
Thank you, Madam President.
DR. ERIC LI KA-CHEUNG: Chairman, I move the amendments to the clauses read out just now. The Bills Committee has considered them. I just wish to briefly elaborate on the major amendments.
I propose to amend clause 1(2) to specify that the general provisions of the Bill, when enacted, will come into operation on 8 September 2004 instead of the original effective date of being 30 days after the Gazette date of the Ordinance. This would enable HKSA to give earlier notification to its 22,000 members so that they may have adequate time to prepare for the changes in their designations. The change will also now tie in with the official launch of HKSA¡¦s re-branding campaign to inform the public of these significant changes.
I propose to delete clause 10(b)(ii) which specifies the total number of the Council members of HKSA as 21. The amendment is necessary since the actual number of Council members may be 20 only, in case the immediate past President of HKSA is also elected as a Council member in his own right.
I propose to amend Clause 16 to limit the scope within which the Council may require a CPA to give explanation of his act or omission. After the amendment, Council can only require explanation in respect of any conduct which appears to the Council to be unbecoming of a CPA, or which may affect the reputation, integrity and status of HKSA, or which may fall within the disciplinary provisions in section 34(1)(a)(iii) to (xii) of the PAO.
The purpose of the amendments to clause 17 is to specify the purpose of making the register of certified public accountants available for public inspection, and to provide that the register may be maintained in a form other than documentary form to cater for on-line access to the register by the public in future.
Clause 22(e)(ii) and 25(a) are amended for the purpose of specifying the designation of "certified public accountant (practising)" in singular and plural forms.
The purpose of the amendment to the Chinese version of clause 28(e) is to improve the drafting to reflect more accurately its English version.
The proposed amendment to clause 29(b) is to rectify an error since the exemption from complying with the specified requirements for issue of a practising certificate applies only to a "public accountant" registered by virtue of the repealed section 24(2) of the PAO and not to a "professional accountant".
The purpose of the amendments to clause 37(c) is to designate the relevant paragraphs under section 35(1) to make them consistent with the existing drafting style of the PAO.
The proposed amendment to clause 54(7) is to delete a paragraph, which has since become redundant.
The above amendments are made primarily on the basis of the comments contributed by the Bills Committee. I hope that Members would support these amendments.
Thank you, Madam Chairman.
DR. ERIC LI KA-CHEUNG: Chairman, I move the amendments to schedules 1 and 2.
I propose to add a new section 5A to Schedule 1 to rectify a logistic error. The amendment is to extend the period of notice of a general meeting of HKSA to be given by HKSA from 21 days to 28 days before the date of the general meeting since members are given 21 days before the meeting to propose resolutions unrelated to the ordinary business of the general meeting. The proposed amendment to Schedule 1 section 23(7) is consequential to the proposed amendment to add the new section 5A to Schedule 1.
The proposed addition of clause 8A to Schedule 2 is necessary to change the existing name of "Hong Kong Society of Accountants" appearing in item 16 of Schedule 13 to the Inland Revenue Ordinance to its new name "Hong Kong Institute of Certified Public Accountants".
It is necessary to amend Schedule 2 by adding clause 15A to change the existing designation of "certified public accountant" appearing in Forms 4 and 5 of the Second Schedule to the Travel Agents Regulations to the new designation of "certified public accountant (practising)".
I propose to delete section 20 of Schedule 2 for the reason that the term "professional accountant" in section 68(2)(b)(i) of the Occupational Retirement Schemes Ordinance is used as a generic term and would not be interpreted as meaning "professional accountant" as defined in the PAO.
The addition of section 29A to Schedule 2 is necessary to amend the definition of "auditor" in section 2(1) of the Electoral Affairs Commission (Financial Assistance For Legislative Council Elections) (Application and Payment Procedure) Regulation to refer to the new designation of "certified public accountant (practising)".
The amendment to Schedule 2, section 52(b) is to rectify a drafting error in the definition of "certified public accountant (practising)" in section 2 of The Orthodox Metropolitanate of Hong Kong and South East Asia Ordinance.
The addition of section 55 to Schedule 2 is necessary to change the term "certified public accountant" in section 13(3) of the Hong Kong Sports Development Board (Repeal) Ordinance to the new designation of "certified public accountant (practising)".
These CSAs are primarily technical in nature and I hope that Members would support them.
Thank you, Madam Chairman.
Third Reading of the Bill
DR. ERIC LI KA-CHEUNG: Madam President, the Professional Accountants (Amendment) Bill 2004 has passed through Committee with amendments. I move that this Bill be read the Third time and do pass.
9 July, 2004